Business Barometer® Small business confidence continues to fall in June

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Toronto, July 4, 2012 – Confidence among Canada’s small- and medium-size businesses continued to fall in June, according to the Canadian Federation of Independent Business (CFIB). The Business Barometer® index dropped from 64.8 in May to 62.1, essentially wiping out the gains made since last summer when major concerns about Europe’s debt situation had burst open.

“The weight of concern over the prospects for world economies continues to push business confidence down in Canada,” said Ted Mallett, CFIB’s chief economist and vice-president. “If there is any good news, it is that our numbers suggest the economy is still growing, albeit at a slow pace.”

Business owners in Alberta (73.3) and Saskatchewan (72.5) have collectively been the most optimistic in Canada for 11 consecutive months, while entrepreneurs in Manitoba (65.9), New Brunswick (65.7) and British Columbia (65.6) are comfortably above the national average, and those in Newfoundland and Labrador (61.3) are close to average. Optimism is lagging in Ontario (60.7), Quebec (59.7), Prince Edward Island (59.5) and Nova Scotia (56.4).

“Insufficient customer demand was the most commonly cited constraint on business performance, although concerns about customer demand have gradually trended downward in 2012,” added Mallett. “Meanwhile, concerns over shortages of working capital have increased slightly through the year, and about one business in four appears to have significant difficulties in finding necessary credit.”

Declining confidence is prompting business owners to become more conservative in their hiring plans: 15 per cent of business owners expect to increase full-time staffing levels in the next three to four months (compared to 21 per cent who said the same in May), while 12 per cent said they will cut back (versus 10 per cent in May). Overall, 40 per cent of business owners described their state of business to be in “good” shape, about three-times the 12 per cent who said their state of business is “bad.”

Measured on a scale of 0 and 100, an index level above 50 means owners expecting their businesses’ performance to be stronger in the next year outnumber those expecting weaker performance. According to past results, index levels normally range between 65 and 70 when the economy is growing at its potential. The June 2012 findings are based on 748 responses, collected from a stratified random sample of CFIB members, to a controlled-access web survey. Findings are statistically accurate to +/- 3.6 per cent 19 times in 20.

For more information or to arrange an interview with Ted Mallett, contact Meghan Carrington at 416 222-8022 or email public.affairs@cfib.ca

As Canada’s largest association of small- and medium-sized businesses, CFIB is Powered by Entrepreneurs™. Established in 1971, CFIB takes direction from more than 109,000 members in every sector nationwide, giving independent business a strong and influential voice at all levels of government and helping to grow the economy.